Good day, and welcome to the Smith & Nephew 2014 Q2 and Half Year Results. Today's conference is being recorded. [Operator Instructions]

Okay, good morning, everyone. So I'm Olivier Bohuon. I'm here with Julie Brown, our Chief Financial Officer, and welcome to our second quarter presentation. I will cover the highlights and then hand over to Julie to take you through the numbers. I will then come back to discuss strategies. Stay tuned to a long presentation. I'm going to spend a little more time than usual. We have some interesting things to share with you. And as usual, we'll take question at the end of the presentations. So we delivered underlying revenue growth of 3% this quarter. After adjusting for currency and ArthroCare, this presents reported growth of 7%. We also had 1 less sale day, reducing growth by just over 1%. Our strong performance this quarter reflects the successful execution of our strategy. Our investment in Emerging markets has delivered a 17% increase in revenue. And we drove good growth in Bioactives and Sports Medicine Joint Repair. In Orthopaedic Reconstruction, we saw an improved performance in both U.S. Knees and Hips. This good global dynamic were partially offset by our performance in Wound. We also completed the ArthroCare acquisition in the period. I'm very confident in our ability to deliver and very excited by the many prospects for our enlarged Sports Medicine business. The trading profit was $255 million, giving a trading profit margin of 22.3%, an improvement of 70 basis point over last year. We achieved EPSA growth of 13%, reflecting the positive operational performance, the addition of ArthroCare and the result of a lower tax rate. Today, we also announced an interim dividend of $0.11, in line with our formula and representing a 6% growth. I will spent some time on our strategy later in the presentation. It is 3 years now since we have announced here the…

Thank you. So thank you, Olivier, and good morning, ladies and gentlemen. So turning to the Q2 results. I will focus on 4 items: first, revenue and profitability analysis by business segment; second, the income statement; third, cash flow and capital allocation; and fourth, the outlook for the second half of 2014. My first agenda item is an analysis of revenue growth by business segment, but first, to comment on the acquisition of ArthroCare. The results I'll run through today include 1 month of trading from ArthroCare. And to give you an idea of the scale, sales in the first month was $31 million. Overall, group revenue in the quarter grew by 3% on an underlying basis. And underlying growth rates are being adjusted to give a like-for-like year-on-year performance. By division, Advanced Surgical Devices grew by 4%, and Wound Management was flat compared with the same quarter in the prior year. Acquisitions added 3% to our growth rate. This includes the acquisitions in Brazil, India and Turkey and the recently completed ArthroCare deal. Currency impacted the group favorably by 1%. And in reported terms, group revenue growth in the quarter was 7%. Finally, there was 63 days this quarter compared with 64 days in the same quarter last year. And we estimate that it if had been the same number of days, our growth rate in the quarter would have been a little over 1 percentage point higher. This slide shows the underlying revenue growth by geography and by business segment. Revenue is shown in the top half, and the growth rates are shown in the lower section. Turning to the bar chart in the lower section, ASD growth worldwide was 4%, and notable was ASD growth in the U.S., driven by our Recon business and Sports Medicine. In…

Thank you, Julie. So 3 years ago, we started a -- the journey to make Smith & Nephew a different company, to become more fit and more effective. And I would like to highlight today the progress we have made by driving our Strategic Priorities. So 3 things: firstly, I will show how we are rebalancing the company toward having a greater proportion of revenue from higher growth opportunities; secondly, I will show an example of the Strategic Priorities in motion, in action, by showing how we are focusing our resources in the reconstruction market to address unmet needs of customers, and this will cover new technologies, and, importantly, a new commercial solution to meet the different needs of an expanding type of customer; and finally, I will update you on ArthroCare. So you know the 5 priorities that drive our decision-making, and you are all aware of the actions we have taken over the last 3 years, from combining orthopedics and endoscopy, to reinvigorating our R&D programs, from major efficiencies and automation program for significant acquisitions. I won't address the point. An important result of this is the continued rebalancing of our growth toward areas of higher growth, and let me put some numbers around this. We often classify different parts of our company as having the potential to grow revenue at different rates, depending on underlying market dynamics, geographic areas or a particular position that we can have. In 2011, only 35% of the growth was operating -- of the company was operating in higher growth. Including the acquisition of ArthroCare, the pro forma proportion for H1 2014 is now 15 -- 50%, 5-0, in higher growth, a clear indication that our strategy is working. Where are we going on this journey to rebalance Smith & Nephew? What…

It's Michael Jungling from Morgan Stanley. I have 3 questions. Firstly, on the M&A side, and Olivier, I think you mentioned recently in the press that Smith & Nephew can go on it's own and there's no need for M&A. Is it -- are you categorically against M&A? Or is there a price where you would say absolutely would make sense for Smith & Nephew to be in the ownership of someone else? And point number two or question number two is on the cost savings of $120 million that were previously announced but have been reemphasized. Have you decided how much of that will go to margins compared to the past? That will be useful. And thirdly, on the tax rate, can you highlight what you are doing to reduce the tax rate and whether there is actually incremental scope to do more than 1 or 2 points of incremental tax rate benefits?

Okay, thanks. I will leave the tax to Julie. On the -- on your first question about M&A, look, to be very clear, M&A -- we like M&A. I don't say that we don't like M&A. You have seen that we like M&A. We like to be in a position to acquire a good -- growing businesses for Smith & Nephew. My comments on M&A usually is that what I don't like in the M&A is the defensive M&As. This is not something we have been looking at. I mean, we have always tried to -- and that's why, if you remember, I've mentioned Biomet many times. Think that makes sense for us to be with Biomet? No, it doesn't. I mean, I'm not looking for any defensive deal here. We want for -- we want aggressive deal, helping us to grow better. And now all this inversion, I mean, all this noise around M&A, U.S. companies acquiring European company, okay, this is all his. I tell you, I'm not at all on this stuff. I mean, we are focused on making the business better. This is not my job nor the job of the company to make it, plans of what could happen and so on. So for the moment, it's not a distraction for us, I tell you. So we have a board. We have an entire board. That's a board matter. It's -- for us, our job is to make this company better and more effective. So -- but again, I mean, things can happen. You'll never know.

Could you see a potential benefit for your Orthopaedics Recon business to be owned by someone else and actually benefiting your shareholders, your current Smith & Nephew shareholders?

Recon, I -- maybe I was not very clear of what I've shown, but I see the Recon business with a number of opportunities. First of all, 85% of the growth in the Emerging Market of Smith & Nephew is coming from this business. So it is the anchor of the growth of Emerging Markets, there's no doubt, and we have a great portfolio for that. For us, what we do now for the midtier. Second, we have all these opportunities within the Reconstruction to have a significant good growth, and you have seen the JOURNEY II dynamic starting to -- despite many questions that we have had in Q1 about -- are you able or can be able to make something? Yes, we are. Again, it takes time. I mean, it's a business which is not a -- moving like this, quickly. It takes some time. I think now we have found the right products. We have a great development of the JOURNEY II follow-up, a great development of the VISIONAIRE technology. These new instruments, which are the disposable instruments. I mean, there's a number of things here that we are very proud of, and I'm very confident. So I don't think that putting this business within other hands will be better. I don't think so because, again, when you -- and that's what I've said about Biomet and Zimmer. I call it defensive deal because I don't believe that 1 plus 1 equals 2 in terms of R&D, in terms of new products. I think that 1.1 will be made 1.3, a 1 plus 1, because -- what is happening? Usually, you have a shrink of -- it's just to save costs, and that is not the point for us. So I don't think it will be much better. I think we have the tools to make this business a good business. And again, as I said, it's important for our cash, it's important in terms of Emerging Market, and we believe it could be also a significant growth lever. Julie, on tax?

I'll take tax and then come back to you. The other question was margin.

On the margin, yes.

Yes, I'll take tax and then -- I'll take tax and come back to margin. So in terms of tax, I mean, as you know, Michael, Smith & Nephew's tax rate has been 30%, actually, in the last 4 years. And the decisions that have driven that are obviously historical about where we've placed IP, manufacturing, strategic marketing, promotional execution. So what we're doing is we -- tax is one of the considerations we're using now when we sign new assets or high-growth assets. But always, we follow the economic realities of where the business is doing the activity. So essentially, what we've done is we've looked at those key value drivers and looked to improve the tax rate, as I mentioned to you I would when I joined Smith & Nephew. So we're now -- we've delivered a 200 basis point reduction in 2 years. I see it as being 150 to 200 over the next 2 years. If you say, "Are you happy with that?" No, I would like to do more. But clearly, I will always work with the business and follow the economic realities of what we do. In terms of how we're doing it, it's all based -- I mean, obviously, the -- we have the acquisition of ArthroCare, we've got some major assets in the portfolio, as you've seen, Olivier has talked about Syncera, we got HP802, we've got a number of big assets in the portfolio, and we're insuring that they're cited effectively.

So the pattern is said to be going towards a lower tax rate [ph] countries, is that what you are suggesting or...

Only if it's consistent with the way we run the business and the way we want to run the business in terms of where those activities are placed, yes. Yes. And we've also had the benefit of a more favorable change in U.K. tax legislation as well. Of course, we're a U.K.-based company. In terms of the underlying rate, now it's down -- will be down to 20%, we've got a patent box. So there's a number of favorable things in terms of legislation as well. Okay?

Michael, I remember your question last quarter about "what the hell is happening with the money you save? We don't see the return on this," which was a great question, actually. I've been reflecting a lot on this. Actually, we have said, if you remember, we had a plan which was supposed to save $150 million. We have now reached $140 million of saving out of this first plan. And the savings have been used in 3 ways. A, more R&D, as you have seen, went from 3.4% R&D on sale to something like 5.6%. I think, this is 4 [ph] this quarter, so we have invested much more in R&D. We invested in the Emerging Market, as you know. And we have invested also in some specific fields. Healthpoint was one of them, adding the number of reps and so on. So this money has been spent. And I remember you said, "Well, the $120 million you announced in Q1, what is going to happen? Are you going to see that through the margin? Or are you going to invest again without showing us a good return?" We planned to show you that in detail, actually, with a bridge of the margin in Q4. And we are going to give you also in Q4 something that we're not used to do, a guidance for the margin on a medium-term basis. So you will see where the money goes. And if you want some highlights of this, a significant part of this will go in the margin. So this is what I can tell you now, but you will do that in Q4. We'll bridge, actually, from 2011 to 2014 what has been done -- on the margin and how things are moving because if you look at the margin we had in 2011, I think it was 21.8%, correct?

Yes, it is right. Yes.

Doing nothing, the margin today would be 25% now, in H1, okay? But we have done all these investments. So you will see how we bridge that, and Julie will show that to you in details. And you'll see how the return of this investment will happen and what the consequence of this on the margin, plus the $120 million of saving and what [indiscernible]. So that will be disclosed in Q4.

So to be clear, the $120 million savings will be more of a cost savings exercise going to margins than that previous $150 million?

No doubt. No doubt, even if we keep the right to -- if we believe that there is an investment to do, to take some of this money to invest. We are never driven by the margin itself. Like I said many times, I don't want -- it's not something which is -- Veronika? I'm sorry.

No, that's great. Veronika here from Goldman Sachs. I have 3 questions as well. The first one is, Olivier, on your goal to have 2/3 of the business from the higher-growth areas. Can you help us understand what the timeframe is for that? And how are you thinking about that from an organic versus acquisition perspective? Do you need to do another couple of deals to get there? Or can you do that organically?

No, it should be mechanical. I can answer the question. We plan, obviously -- if we have opportunities to buy other high-growth businesses to do that. But mechanically, the transformation of this organic business that we have now, plus the acquisition of Healthpoint and ArthroCare, which are going to be both in high-growth segments, will drive us to this.

And what's the timeframe for that?

I don't tell you, but I mean it's an ambition, yes. You need to have ambition, let's put it this way.

The second question is on the SANTYL price increase. Julie, I'm wondering if you can help quantify what the increase is heading into Q3 [ph]. And as you think about the growth that you saw in Q2, what proportion of that do you think was a pull forward? Just so that we can think about how Wound trends for the rest of the year. And my last question is, are you seeing any signs of benefit to your business from the Zimmer and Biomet transaction in terms of disruption in the sales channel?

On the -- I'll leave something with Julie, if you want. On Zimmer, Biomet, we have not seen yet a lot of disruption, but I think that we start to see people leaving, we see that; some disruption in distributors in the U.S., wondering what is going to happen. So we don't see that in our figures, but I think there will be an impact, as we mentioned in Q1, with no doubt, no doubt. So Julie, for SANTYL?

And I'll take SANTYL, yes. Yes, so in terms of -- I think as Olivier mentioned, the SANTYL price increase this time was an inflation-based increase. It's occurred in May, so we've had an element of pull forward that's occurred in the second quarter. In terms of volumes, Veronika, your question about the volume growth, we've seen month-on-month improvement in SANTYL volumes, so sequentially, we've improved. And basically, although we don't want to split out the exact figures in Q2, what we're very confident about is the midteens guidance we've given for the Healthpoint or Bioactives business, so I think you can use that to guide the projection of that business.

Tom?

Tom Jones from Berenberg. I'm just wondering if we could change tackle a little bit and talk a little bit about the Wound Care business. I mean, it's close to 20% of your revenues. It's the second biggest bucket of revenues. No one ever talks about it, and it's come under some very significant pressure this quarter. So I just wondered if you could give us a bit more color about what's going on there.

Yes. It's obviously a good question and something we monitor very strongly. First of all, let me explain that the Wound business is not one type of business, as you know. We have -- so the Bioactive, and Julie has mentioned that we are very happy with our guidance of midteens. This will happen. It's a U.S.-only business for the moment. It will become a worldwide business at the launch of HP802. We'd certainly be able, by the way, to give you insights on 802 also and guidance starting January because the clinical -- or the first clinical will end after Christmas. So in the Q4, you will have a pretty good knowledge of what is the potential of this product. That's important for you to know. Second is the Advanced Wound Devices, okay. Here, we have -- what do we face? Price pressure. KCI is pulling the prices down, no doubt. We have had this issue of RENASYS, as you know, and we have stopped to commercialize the product. It will take some months to come back, and this has been significantly hit. As you have seen the impact of this, around $30 million, with provision of $25 million for the bad debt in exceptional item this quarter, and this will take time to recover, no doubt. Having said that, the PICO, which is the portable negative pressure device, is doing extremely well. And we are going to refocus because we have decided, actually, despite the stop of the consideration, to keep all the people we have, which it has an impact on the margin, obviously, but also, we are going to reallocate this people on different products. PICO is one of them, and potentially, on some Wound Care products. We also have a negative pressure, all the potential…

Maybe to take a step further, when would you expect that business to be -- the Wound Care specifically, to get back into positive growth territories? Is this a project that's going to take 6, 12 months? Or is it in week and months, it can bounce back quickly?

It will take, I think, a few months but not more than that.

And then a question on Syncera. When medtech companies start talking about becoming solution providers, I usually feel slightly sick. And Obviously, in a lot of other companies, there's been a bit of a disaster, but I can see the rationale of what you're doing or why. In the bit of the market you're aiming at, it seems to make an awful lot of sense. My only concern is if it is successful, which we all hope it will be...

Yes, it will be.

What's the risk that it starts to cannibalize your other business model you have in Recon? Or is that actually another risk -- or rather an opportunity, and you'd perhaps be happy if the whole market moved that way, and you, as one of the smaller providers, will be therefore relatively strong by having adopted this marketing strategy a little bit earlier than the others?

I think I'm -- first of all, I'm very happy to have started this journey 18 months ago because we have realized at this state that there was a big unmet need and a big opportunity. Again, it's totally different customers. We are going to keep the business that we have, and we're going to develop in the niche I was mentioning. Here, 5% to 10% of the accounts in the U.S. are not satisfied at all, and we cannot sell our products. Actually, they are not customers for us. We have 0 business in this type of customers. What we have done recently, I mean, making the service and the work, we have realized that they were extremely happy with the offer of Smith & Nephew, of Syncera powered by Smith & Nephew. And I really believe that there is no cannibalization on this because they are totally different, a different system. Will that happen 1 day in the account? I think that the market, that was 70% surgeon-led accounts and 30% admin-led accounts 3, 4 years ago. We know now it's roughly 50-50. So a lot of pressure for the surgeon to follow the admin guidelines and basically go cheaper. I believe that this will happen in the next 5 years. We will see more and more admin-led accounts and less and less surgeon-led accounts. So yes, the offer will certainly take a part of the business one day, and that's why I think it's very important to be prepared now. And we are basically going to try and fine-tune it and be prepared for the future if this happens. But I still believe -- it's like when you buy a car, I mean, you want to have a basic car or you can buy all the options around, the air conditioning, all that stuff, okay, it's the same. Here, it's not the product that we sell because we sell the same, it's a different solution. That's all.

Just a very quick follow-up. What would you say your market share relative to your overall market share in Recon is? Between -- so say you're 10%, 11% overall, but what would you share your share is in surgeon-led accounts and your share in admin-led accounts at the moment?

I don't have the figure, but I mean, I would say it's much higher in surgeon-led accounts than in admin-led account, yes.

Right, that's what I thought.

Yes. We have -- let's take 1 or 2 question by phone, and then we'll go this way.

Our telephone question today will come from William Plovanic of Canaccord Genuity.

Two questions. The first is just any comment regarding your core Knee and Trauma business. You had 1 less selling day, yet that was very strong. Is there anything that has changed over the last 3 or 6 months that's helped that reaccelerate? And then I do have a follow-up.

Okay. Well, on the core Knee and Trauma, I think 2 things have changed. The development of the Knee -- of JOURNEY II is definitely one of the key levers of the development. And if we now beat the market growth in the U.S., there's no doubt this is why we have been working on this JOURNEY II BCS and the JOURNEY II CR. And as I said in my presentation, this is the start of a journey. I mean, it's a progressive launch, and we'll see more and more impact of this product in the future. Trauma, you have 2 things. I mean, on a worldwide basis, you have the impact of the GCC tender, which was a significant order in the Trauma business, so this is basically something which has to be taken in consideration. But in the U.S., though, the Trauma business is working pretty well. As you maybe remember, last year, we have added a number of specific dedicated Trauma reps. I think it was around 80, 85 people purely dedicated to Trauma. And we start to see the impact of these professionals on our business. So I think this is it. I mean, this is not rocket science. It's just good products and better execution.

That's helpful. And then on the Syncera business model, I think you're definitely the first major player to vocally state you're doing this. Just some -- as we think about this, you've been very clear, new accounts, but is this -- they will have the technician? Mechanically, how does this work? Do they -- does the hospital pay for -- have its own internal technical people? Or are they your sales reps that will be in there? Is this only going to be U.S.? Is it only going to be like certain geographies at the start? Or do you plan to really kind of push this very broadly in the U.S.?

Okay. So many questions in your question. So about the geography and the scope, we start in the U.S., and we'll see if -- I believe there is other countries where we can benefit from this offer. Europe is certainly one of them. Australia and New Zealand, why not? I mean, we have to work, but we want to start with something where we believe we have a very good grip and know-how of what is happening there and what are the needs and of market potential. The first part of your question regarding the technician in the OR, well, there is no technician in the OR with the Syncera model. We have a -- and I think we'll have Phil, a presentation of this in September. Maybe we'll have a very specific presentation for you, where you will see through videos and stuff how this works, this is the registerable [ph] part. But we have no technician. The hospital has no technician on -- that they pay themselves. We train the doctors in our site in Memphis or we train them on-site also for a moment. But then they just leave by themselves. It was a technology we give them, which are extremely sophisticated, actually. So that's -- there is no more rep in the OR, to answer shortly your question.

Okay. And as you said in your presentation, you're going with your older technologies, the GENESIS II and the SYNERGY, REFLECTION rather than your newer technologies, correct?

Yes, because we -- obviously, as you know, the JOURNEY II knee is not for everyone, so we wanted to cover at least 80% of the needs of the patients. And between GENESIS II and the synergy system SYNERGY stem and REFLECTION cap, we cover all this. So I think it was a much wiser way of covering the needs.

[Operator Instructions]

We didn't see you at Q1.

Q1? I was the one [indiscernible] remember what happened there. But I'm here now.

Good.

This is Yi-Dan from Deutsche Bank. Three questions. The first question is on Syncera. So you're clearly the first companies to do this or to announce it. Are you aware of where your competitors are in this area? And secondly, also, Syncera. By my calculation based on your comments, it seems that your hospitals will get about 1/3 of the price of implants that they're paying at the moment. And the question is, clearly, the costs for you will be lower, as you've indicated, but what will be the margin for you on these incremental revenues?

Okay.

I'll start with that one, and I'll do the other...

Yes, the question is good.

Making up for Q1.

Yes, yes, yes, I know you. So the margin, obviously, there will be a slight dilution at the start because we'll build up the stock but not much, actually. The idea of the Syncera model is to have a margin which is equivalent to what we have -- at least equivalent to what we have with the highest-priced product and more expensive SG&As. So here, there's no doubt that this will be compensated by the -- so it's lower discount, basically, and higher discount, lower price, lower SG&As and trading margin equivalent to the one we have. What do you say about the...

Competitors [ph]

What?

Where are your competitors? And how long do you [indiscernible]

The competitors, I don't know. The question is if you want -- take a company like Zimmer and Biomet, what I think they -- what they seem to do now than just doing things like that. But when you are #1, it's not something you do, I think. I think it's great for us as #4 to do that. We bring here a disruptive model. Again, it's not a model which is a -- something that you certainly say, well, I'm going to sell my GENESIS II at a discount. No, it's -- you -- I mean, and I would like you to see that in September when we do that. There is a huge technology behind this to avoid the technician in the OR, to make the logistics simpler and so on. So it's not something you can decide like this. So I think that, for what I've seen and what I know, and I don't know everything on this, I don't know anyone of the big competitors having started to do the work that we have done, so I think we have a strong advantage here. And it will take a while for a newcomer to build such a model because, believe me, if you want to make it successful, it's not an easy one to put in place. It's a lot of work.

And then, how long would it take for us to start to see the benefits of this? Is it like a usual ortho launch, it will take you about a year to get people warmed up to it, and then we'll start to see it after that? Or is it more immediate than that?

Well, we need to ramp up with the customers. So for the moment, we have a number of customers starting to sign the contract. Those are contracts which are usually 3 year -- a 3-year contract, so it will take a while. You will see the results and the benefits of this. I think, yes, in a year, I think we can have a good understanding of the value of this model and what -- the potential of it. Because one thing is what we do; one thing is, what is the potential? Are we talking about $500 million, $300 million, $1 billion? So that's something we have to see with the development of the operations.

And then my second question, on the midtier products...

Third question, yes.

Actually, if you're counting the questions, it's the fourth.

Yes, okay.

But the second subject, let's say.

Okay.

So on your midtier strategy, where are you on that? Have you actually launched products there?

Yes, we have launched a number of products there. And we are preparing also a number of launches in Recon. Trauma, we're also very happy with the acquisition of Sushrut-Adler in India. As you know, it's a Trauma business. And we now start to export in other midtier geographies. We have the first contracts. Actually, it's worked very well. We have new products launched also in Wound Management. We have these low-cost cameras of visualization that are doing very well. We launched that 6 months ago or a year ago in India. We extend that also. So yes, we have a number of launches. The structure is built. We have a great team there. We have an R&D Head dedicated to midtier. We have all these hubs. As you remember, here and there, we have 2 in China, 1 in Shanghai, where you have met, I think, the guys there -- 1 in Shanghai, 1 in Beijing; the trauma hub in India. So yes, it's a good, good, good acceleration.

Okay. So what percentage of your portfolio are you -- have you launched already? And how long would it take you to get to the 100%?

On the portfolio, it will never be 100% in midtier. We cannot put 100%.

Midtier. Or 80, 80-20 rule.

No, it's -- I think that we have launched and we say maybe 15% of the potential of what is going to happen, so it's a ramp-up. We have development of specific products. For example, we develop specific knee for the midtier. As you know, developing a knee doesn't take 2 months. It takes a while. But we have a program, we have a portfolio, we have as serious as the one we have for the high tier.

And finally, profitability.

Profitability of what?

Midtier products.

Exactly the profitability of the Syncera business, again, we sell the product cheaper to address the customer needs for the midtier, but the model is also much, much cheaper. Same, we don't make medical education. We don't have technician in the OR. We don't do all of this, so the net-net, the margin is the margin of the rest of the business. Okay? Sorry. Yes? Sorry, you're next. I'm sorry. Ladies first. Go on. Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division: Lisa Clive from Sanford Bernstein. Three questions. How fast do you think the AWC market is growing in the U.S. today, given there's a lot more of a focus, it seems, on preventing infections? And how long do you think it'll take to get your U.S. AWC business up to those growth rates? Number two, in negative pressure, do you think it will become harder to gain share in the canister-based market, given the disruption with RENASYS? Even after you get that product back on the market, obviously, it's fairly inconvenient for your current customers to not have access to it for several months. And then number three, thinking about Syncera, my understanding is that in Europe, it's already a somewhat lower touch business model, where the rep isn't always there in the OR like they are in the U.S. So could you just remind us of how the EU versus U.S. sales model differs? And I guess I'm just really trying to understand how appealing Syncera would be to Europeans, seeing Europeans already get a lot lower pricing but also lower service.

Yes, yes. Actually, U.S. and Europe is same model. It's exactly the work is the same way. We have technician in the OR, same level. The cost of operation is the same. So there's no big difference on this point. On the market, I was checking the figure, a question on the AWC market in the U.S., it is -- the market is 4%, the U.S. is also mid-single, maybe 5%. Yes, so maybe you remember, I've always been disappointed by our Wound Care dynamic. And I was maybe candidly thinking that it was just a question of size and mass in the U.S. And you'd certainly remember that, I've said that we're subscale in the U.S. in Wound Care. Actually, the first thing is we're not good. And then we can be subscale, but that's something else. We have to address first, as I said, the quality of the execution and the choices of the promotion of the product, which is what we have done during the last 2, 3 months very seriously -- very, very seriously. And then we can think about adding scale, that's it. But scale is not the only problem, which is, I think, good news because it means that we can be much better in this business. So I think that answer your question. On the Advanced Wound Devices and the stop of the capitalization of our classic negative pressure, I think there's definitely a place for the PICO type of product, which will certainly take some place but will not replace totally the RENASYS. So that's why I'm cautious in telling you that the RENASYS $30 million impact in revenue is there. We're going to try to fill the gap in refocusing the reps on a few things, adding resources on PICO and so on, but that will not fill this gap. And it will take a few months for the customers to be able to get back on track with the product. There was one -- this one, and then it's you. Whatever. Well, okay. Next one, you are the one. Yes, I'm sorry.

Just following up on some of the earlier questions. I take it absolutely that your position in terms of the defensive nature of the M&A being discussed in the sector at the moment. And also, clearly, your desire to remain independent, wouldn't there be a way of basically getting past all of that by bringing forward or becoming more aggressive yourself in terms of additions? And as you've just said, potentially, there are good rationale for if, say, expanding in, say, the U.S. Wound market? Could you talk a little bit to potentially what strategic potential deals you're thinking about in Wound Care? And also related to the wider question, would you consider using equity if the right deal was there for a transformative deal?

We could -- to answer your question, I mean, we could do a transformational deal if there was something making sense. There is no reason why not to think about it. The question is, do we find the bride [ph]? That's another question. On your question about adding new legs or thinking about what's next, adding strength in Wound Care, there is definitely a number of places -- or spaces, actually, where we can add business in acquiring things. I think, I still believe that there is an opportunity in Sports Medicine, in Extremities, where we can still benefit from an acquisition here. It's high growth market. Again, think about strategy is to go to high-growth business, okay? So it's really not going to a business which is not growing because that's -- we don't need that. So Extremities is still -- Sports Med, we still have potential to be bigger even if we have market share now which is significant because we almost reached, what, 30%, 29% market share, combined with ArthroCare, so it's significant. So maybe some micro spaces. You have seen the hammertoe type of things or some specifics like this. In Wound, no doubt, there is a potential for me in Wound Care, I mean, to have more scale because I believe in scale in Wound Care. I don't in Recon, but in Wound Care, I do believe in scale. So those are the places we will look at. Now bigger deal, why not? Again, if it makes sense, it could be an option also. Okay, 2 more questions. You now, and then one more.

Justin from Societe Generale. First question, just on the $120 million, apologies if I've made a mistake here, but I got the impression 3 months ago, your bias was to try and reinvest that money. If things have changed...

No, no, no, I mean, maybe I was not clear in Q1. In Q1, recall we said that there is this $120 million will be used potentially to fund some opportunities if we need money to do that. Syncera was -- in my mind, at this time, use some money for this, for Syncera. But the idea has been to save -- it's a cost saving program, okay? So as usual, as it goes down or you can pick some of it to fund some opportunities. So this is what we have said, and that's what I'm saying again. So it's -- most of it will go down.

So no change from...

No, no, no.

Okay. And then second and final question, just on Syncera.

I'm trying not to change my views quarter-after-quarter, so it's -- yes.

And then just second, final question on Syncera. Just wondered if you could put a bit more color on the working capital requirements and how that's going to be lower and how that might affect returns going forward.

The good news is that it will be much lower in terms of working capital than the classic model because they'd by -- I mean, the customer buy the products, and they carry the cost of it, and we don't. In terms of logistic, it's also much more efficient, so it will be a much lower working capital. Okay, one more question. Is there anyone? There's one here.

Patrick Burnia [ph] from Jefferies. Just on Wound Care again. On Slide 21, you have put Wound Care into the slow growth market in Established Markets. And on Slide 28, you show you have done almost the majority of the deal in Wound Care. And you also said that 85% of Emerging Market growth -- of your Emerging Market growth comes from Recon.

Yes.

So concluding all this, because when I remember 2 years ago, you have labeled Wound Care as one of the big growth drivers.

Well, Advanced Wound Management. I'm sorry. Again, I've never said Wound Care was a growth driver. Wound -- Advanced Wound Management is a growth driver of the company because of Advanced Wound Devices, which has a potential of growth significant. Actually, it was 1% this quarter, but the rate of growth of the Advanced Wound Devices within the company has been between 12%, 14% roughly. So it's high-growth business, potentially. Advanced Biologics, obviously, is a very high-growth business also. And Advanced Wound Care, as I was saying, it's 4% growth on a worldwide basis, so it's not a high-growth business. Even if it's a high-growth business for us in Emerging Market because an example of the quarter, we grew 13%, mostly Advanced Wound Care in the Emerging Markets, so it depends where you are. But on a global basis, Wound Care is not a growth driver. Okay, ladies and gentlemen, well, thanks a lot for attending this second quarter, and see you at the third quarter. Thank you.